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“We are certainly not going to give them any loans…that is out of question. Whether we will subscribe to the equity or not is something we have to take a call on that. Let us first see who gives subscription to the shares and only then decide,” said a senior source from HDFC.

A day ahead of the IL&FS board meeting, LIC toldMoneycontrolthat it would facilitate a conditional loan of about Rs 700-800 crore. This is as against the Rs 3,000-crore fund raising that the infrastructure development and finance major is considering to propose on Saturday.

State-owned insurer Life Insurance Corporation of India (LIC), with a 25.34 percent stake in IL&FS, is the largest shareholder in the company followed by Orix Corporate, Japan (23.54 percent), Abu Dhabi Investment (12.56 percent), Central Bank of India (7.67 percent) and State Bank of India (6.42 percent) among others.

According to sources, “Their (IL&FS’s) biggest problem is they got the arbitration that they are not getting the order from NHAI and hence they have a liquidity issue.”

In the recent months, it was seen that the National Highways Authority of India’s (NHAI) bids in the road sector have benefited small and mid-size construction and infrastructure companies due to aggressive pricing by the bigger players like IL&FS Transportation Networks Ltd (ITNL), the road development arm of IL&FS.

With several assets including road projects in its kitty, IL&FS may now look at monetizing some of them to generate funds.

“But it is very difficult to sell roads, so this will take time and IL&FS has a lot of short-term borrowings coming up for maturity…The company’s treasury management has been a little weak. They have funded long term assets out of short term borrowings. And now short-term borrowings are maturing and they do not have the funds to repay it,” the source added.

Apart from the investors, several pension funds, including LIC Pension Fund, have an exposure to the bonds of IL&FS.

Amid a worry of further defaults, IL&FS will suffer the test of times for the upcoming maturities of the short-term bonds it had issued.